Oftentimes, business owners find that their wealth and personal lives are closely tied to their businesses. Suppose business owners do not implement strategies before they voluntarily or involuntarily leave their company. In that case, the outcomes of the ownership transition may fall short of their financial and personal expectations. Additionally, it can pose challenges to the future of the business itself. Working with experienced, accredited advisors can help business owners determine their desired outcomes, build a plan, and continue advising until results are achieved. A successful transition considers not only your business goals but also your financial and personal goals.

• Business Goals: How can you optimize the results of your ownership transition by having a plan in place?
• Financial Goals: Do you have enough, and how much is enough?
• Personal Goals: What will you do after you are no longer the business owner?

Several members of the Lutz M&A team are Certified Exit Planning Advisors (CEPAs). They have successfully helped hundreds of business owners navigate the complexities of transitioning the ownership of their companies. Three primary ways to transition ownership exist: to family, to employees, and to third parties (or any combination).

Lutz M&A uses the Exit Planning Institute's general methodology and process to guide business owners. The key concepts are identify, protect, build, harvest, and manage.

1. Identify

In this stage, the business owner seeks to understand its current value and establish goals. In addition, the identify stage includes an operational assessment to determine the strengths and weaknesses of the company. Assess the following factors:

• Business Value
• Business Operations
• Sales & Marketing
• Legal & Regulatory
• Industry & General Economic Trends & Issues

The goals of this stage include deciding the timing of ownership transition, desired method (family, employee, or third party), business readiness, personal financial wealth, and post-transition personal goals. Depending on the age and desired timing, the goals can vary widely from the beginning of the process to the end. Plans can change, and that’s okay as long as you are ready to adapt.

2. Protect

The protect phase includes assessing inherent business and personal risks and deciding what can be done now to mitigate them. Topics addressed include:

• Asset & Income Protection
• Financial Planning Strategies
• Tax Strategies
• Estate Planning Strategies
• Business Weak Spots (customer concentrations, weak management team, technology, overly involved business owner, etc.)

The main objective of this phase is to get the owner and the business ready for unexpected emergencies. It aims to ensure stability for both the business and the family. By the end of this phase, the owner should clearly understand their current plan and experience some peace of mind.

3. Build

During the build phase, business owners must determine how improvements can be made to accelerate the value of their company and achieve the results identified in the first phase. These improvements can be in a variety of areas but usually include:

• Minimizing the owner’s importance to the business’s continued success.
• Implementing strategies to make the business more valuable to the buyer.
• Management team building.
• Preparing the business to maximize results, whether the sale is planned or unplanned.

The focus is on building value, not simply increasing profits. The owner may need to invest in people, equipment, technology, etc., to grow the value of the business. This stage sets defined goals and will allow the owner to see clear deliverables and benefits from the actions employed.

4. Manage

This phase may not be required if the owner is ready for the transition after the build phase. However, in many cases, the owner has other personal or professional goals that require additional time. This could be building more wealth, implementing long-term estate and tax planning strategies, expanding the business, getting through an industry downturn, or working towards a pre-determined goal. The key is to manage business value and personal goals in this phase. Continue to identify, protect, and build value, but the business will always be ready for a transaction.

5. Harvest

During this phase, all the efforts invested in the process finally come to fruition. The ultimate objective of the entire method is to achieve optimal results on the transaction date. That is the goal. Throughout the process, which can extend over a period of years, all key members of your advisory team, such as attorneys, bankers, CPAs, financial advisors, insurance advisors, etc., will be actively involved, guiding in their respective areas of expertise. You can have confidence that you made the best choices for your business, family, and yourself.

How Lutz M&A Can Help

Your business is likely your most valuable asset. We recommend investing the time and effort to ensure you and your company achieve the best results. Some exit planning advisors run a set process for all of their clients. However, there is no one-size-fits-all in business transition planning. At Lutz, we tailor each plan based on the individual circumstances of the business and owner. Please contact us to schedule a consultation to learn how our Lutz M&A services can help you.